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Paypal, enough is enough

April 20, 2018 6 comments

I used to love PayPal. Really, it was a brilliant solution to a global problem.
As a software developer living in Norway, where I spend most of my time with people who live and work in the United States, India or the Arab Emirates – commerce can sometimes be a challenge. It’s a strange situation to be in, where you have lunch with people thousands of miles away. You call up your friends in NYC after work just like you would a friend down the street; and in the weekend you share a cold beer over video chat, or team up on Playstation to enjoy a game together.

I have become, for all means and purposes, an american by proxy.

s949607563640099117_p14_i1_w1000As a software developer part of what I do is to produce software components. These are intricate blocks of code that can be injected into programs, thus saving other developers the time it takes to implement the functionality from scratch. This is a fantastic thing because one person cannot possibly cope with “everything”. Buying components and libraries is a fundamental part of what a software manager does when prototyping a new product. It is a billion dollar industry and it’s not going away any time soon.

The reason is simple: if you hire someone to research, implement and test something you need in your product, the wages you pay will be 10-100 times higher than if you just buy a pre-fabricated module. I mean, allocating 2 developers to work full-time for a month to make a PDF rendering component (as an example of a complex component) will cost you two months salary. This also leaves you with the responsibility for bugs, updates – the whole nine yards.

“PayPal has a policy where it completely ignores the voice of merchants. They automatically side with the customer and will thus remove funds from your account as they please”

Lets say you have two junior developers making $6000 a month each, coupled with an estimate of 8 weeks to finish the functionality (which is always wrong, so add a couple of weeks for Q&A), that brings us to $12000 + $6000 = $18000. OR — you can just buy a ready to use component for $500 and have PDF support up and running in a day. This also delegates bug-fixing, documentation and updates onto the vendor.

When I wanted to set up shop, I figured that PayPal would be an excellent platform to use. I mean, it’s been around for so long that it’s become intrinsic to international, online economics. It’s available everywhere, and their percentage of sales is reasonable.

Well, that turned out to be a mistake. PayPal is not cool at all when you move from consumer to merchant. Which takes weeks by the way if you live outside the US. You have to send in photocopies of your passport, credit card receipts and social security information; which is illegal in Norway and a serious breach of privacy.

It’s only your money if we allow it

We live in a world where there are a lot of terrible people. People that sell broken goods, that lie, steal and is willing to do just about anything if it benefits them. Honesty is almost regarded as a burden in online business, which I detest and refuse to take part in.

“The second and third calls [to PayPal] resulted in 45 and 90 minutes of “please hold”. They literally exhausted their own merchant to make the case go away.”

asus

UPS is on my door more than the average American household. This is the new reality.

Lord knows I have been victim to some extremely unjust sales representative in my time (havent we all). And the experience has often been that you are helpless once you have received a product. It doesn’t matter if the product you received was faulty, the wrong size – or even the wrong bloody product! As a consumer you often have to calculate how much it will cost you to fight back. And more often than not, fighting back costs more than just accepting that you have been ripped off. I mean, nobody is stupid enough to return the wrong goods to China (for example), because you will never hear from them again.

Well, once I switched from being just a consumer to selling goods and becoming a PayPal merchant – I was shocked to discover that it’s the same situation on the other side! But not from small, semi anonymous scam artists; no it turned out to be PayPal.

PayPal has a policy where it completely ignores the voice of merchants. They automatically side with the customer and will thus remove funds from your account as they please. This happens without a dialog with you as a merchant first. They just waltz in and help themselves to your funds. It’s like something out of a 12th century trial where you are guilty by default and thus there is no room for documentation or evidence to the contrary.

“PayPal didn’t even bother to contact me for verification or comments. They just helped themselves to my registered credit card – which in Norway would have landed them in jail for theft.”

In my case where I sell software components, which by nature is digital and delivered via e-mail, that leaves me as a vendor completely without a voice.

Just weeks ago I got a strange e-mail from a customer who claimed he had not received my software. I naturally took that very seriously so I checked, double checked and triple checked that the software had been sent. I also checked the log on my server to see if the download ticket had been activated (it is marked as active when a full download has been completed. It remains open for 12 months which is the duration of the license).

Well the ticket was active, so there was no doubt that the customer had indeed downloaded the product. And it was downloaded in full. The server picks up on partial downloads so it doesn’t activate should the customer have network problems.

But hey, accident can happen, maybe the customer managed to delete the file or his hard disk was damaged. I gave him the benefit of the doubt and informed him that the ticket has been activated, but he can download as many times as he wants for the duration of 12 months.

In return I got an email saying: “He he, its all good. Thx!

Well, it sure was all good for him, but not for me. Not only had this man downloaded and made use of my product, he sent a false claim to PayPal stating that he never received the software. And since PayPal can’t deal with packages that are not shipped through their explicit channels (which is made for physical goods, not digital), that was that.

PayPal didn’t even bother to contact me for verification or comments. They just helped themselves to my registered credit card – which in Norway would have landed them in jail for theft.

“A parallel is of a man entering a store, buying an ice-cream, slowly removing the wrapping and starting to eat – while walking over to the store manager claiming, he never got an ice-cream to begin with.”

Had PayPal bothered to contact me, which both Norwegian and European law demands, I could easily document that the customer had indeed downloaded and activated the product. I have both the e-mails between the customer and myself, as well as the ticket logs from the hosting company I use.

There is no doubt that this ticket has been spent, only hours before this scam artist sent his false claim to PayPal.

International vs. national law

Norwegian law gives a merchant 3 chances to rectify a situation. This law applies where the customer has not received what they ordered, where they have received a broken item – or where there has been problems with delivery.

When you sell software however, there are two types with very different rules attached to them. The second method is rarely used outside the world of engineering:

  • Compiled proprietary software, which doesn’t avail how the product is made and the customer does not have access to the source code.
  • Source code for proprietary software, where the customer receives the actual source code for the product and are allowed to adapt the code. But there are strict rules for not sharing or re-selling this – since it’s very much intellectual property and once shared, cannot be un-shared.

The latter, source code packages (which is what my customer bought), also falls under “spoilables”, meaning that once the customer has received the package, they cannot return it. This applies to other goods too, such as underwear. Since the merchant cannot know if the product has been used (or copied in the case of source-code) – there is never any return policy on such goods once delivered. If the product has not been delivered however, normal return policies apply.

Since PayPal is an American company, I can understand there is some aversion for adapting their services to every known framework of law known to mankind. But I cannot imagine that American legislation on this topic can differ much from Norwegian law. Selling compiled code vs. source-code are two very different things. Comparable to frozen goods and fresh goods. You dont have a 3 week return policy on fruit for obvious reasons.

A parallel is of a man entering a store, buying an ice-cream, slowly removing the wrapping and starting to eat – while walking over to the store manager claiming, he never got an ice-cream to begin with.

There is no way in hell that this would fly with an american store manager. A friend of mine in San-Diego was so upset on my behalf that he called Paypal directly, but they refused to comment without written consent from me. Which I then sent, only to magically disappear.

The second and third calls resulted in 45 and 90 minutes of “please hold”. They literally exhausted their own merchant to make the case go away.

PayPal, trust is a two way street

This episode has shocked me. In fact it has forced me to close my PayPal merchant account permanently. And I will avoid using PayPal as much as possible until they can show normal, human decency for law-abiding citizen, regardless of what country they come from.

Would you run a business with a third-party that can just help themselves to your accounts? I can’t imagine anyone would.

I have no problem giving a customer his money back, provided the delivery ticket is un-spent. Had the customer been unable to download or somehow gain access to the product – then of course normal money back rules apply. I’m not out to cheat anyone, nor am I hard to talk with.

But when there is no dialog at all – and your “bank” ignores the fact that some people are willing to do anything to cheat his fellow-man, that’s when I pack up and leave.